Actually there are about 5200 listings on MLS right now and yes some people are emigrating to go elsewhere but there were still 17,000 plus that moved to Calgary this year. That number is lower than last year but there are still far more people moving here than people that are moving away.

I say about 7% increase for the year. Most of it you are going to see in the next few months. Springtime is always the best time to sell a house.

One thing I have heard however is that a lot of people have been waiting to list their houses until spring waiting to take advantage of the normally good selling season. If this is the case it could flood the market with listings again and cause another price drop.

I still think prices are going up. Real Estate is a pretty safe investment. It does have its peaks and valleys but long term it always goes up.

To be honest that is the number that CMHC predicted for this year. I have seen anywhere from 5 to about 12% predicted by Real Estate Houses, economists and organizations like the CMHC. The CMHC is usually pretty close and if anything a bit conservative.

People are still moving to Calgary in way larger numbers than the people who are leaving. That fuels demand. The economy is strong, unemployment is REALLY low, interest rates are affordable. We aren't going to see increases like 2006 but to get 7% in a year is a GREAT market.

I say prices could fall by 20% this year, and it may take 8+ years to reclaim there current peaks. There is massive amounts of speculation in the real estate market. In fact there are over 2000 properties listed in Calgary that are vacant or new construction right now. (www.findcalgary.ca)

The subprime market is causing spreads between long term bonds and mortgage rates to be at the greatest level since the 1980's recessions.

Everything is pointing to a serious downturn, affordability is worse than at previous booms, prices aren't substantiated by rental yields, carrying costs are as high as previous busts.

A 400 year study in same sale pairs on house prices has shown that houses appreciate on average at 0.2%/year above inflation. I would consider that another poster claimed 3%/year as normal appreciation (including inflation) is about right.

"On the other hand, the main engine of Alberta's demographic growth—interprovincial migration—has lost some of its importance. Alberta, which has led the provinces in population growth for the last few years, has started to lose more people to other regions than it has received.

Over the third quarter, Alberta recorded a net interprovincial migration outflow estimated at 3,300 people. The last time the province recorded a net outflow to other jurisdictions occurred in the fourth quarter of 1994."

Also, someone had pointed out people are still moving to Calgary in way larger numbers than the people who are leaving.

Actually, last quarter Alberta had negative interprovincial migration according to a recent Statistics Canada news release.

"On the other hand, the main engine of Alberta's demographic growth—interprovincial migration—has lost some of its importance. Alberta, which has led the provinces in population growth for the last few years, has started to lose more people to other regions than it has received.

Over the third quarter, Alberta recorded a net interprovincial migration outflow estimated at 3,300 people. The last time the province recorded a net outflow to other jurisdictions occurred in the fourth quarter of 1994."

Stats for the entire province do not speak for the City of Calgary on it's own. I'm sure Calgary itself still has net positive migration (or you might call it negative if you consider how many Canuck fans have moved to CGY to wash our dishes).

I always wanted to get into this business and Regina was the only area that was feasable for myself. I had to take out a homeowners line of credit on my current property for those houses. I'm paying interest on that monthly but that being said the gain I gained on the value of the properties is astounishing. Also, the fact that my rent covers my property managers/insurance as well is good.

I tend to use this website to monitor housing trends. There is also some good articles there on predictions for next year and apparrentlt Regina still looks good!

There is still strength in the economy, but the supply situation has changed quite a bit in the past year. Builders now have excess capacity and most are sitting on large inventories of spec homes and buildable lots. At the same time, the City is being pressured to rubber stamp development proposals and vast tracts of newly serviced land could be added to the city's inventory in the next few years. I think this supply pressure will, at the very least, keep prices in check.

Radley, some of your stuff is interesting and all, but clearly has more to do with the US than it does with Calgary. What does the subprime mortgage issue have to do with Calgary? (Other than the markets/banks losing some liquidity as a result...which is not terribly applicable to this thread...).

Fact is that lending practices in the United States are vastly different from here. The subprime issue will cause trouble in the stock market (along with some other disappointing data), but this does not in itself mean that Calgary home prices will drop by 20%, or even drop at all.

Radley, some of your stuff is interesting and all, but clearly has more to do with the US than it does with Calgary. What does the subprime mortgage issue have to do with Calgary? (Other than the markets/banks losing some liquidity as a result...which is not terribly applicable to this thread...).

Fact is that lending practices in the United States are vastly different from here. The subprime issue will cause trouble in the stock market (along with some other disappointing data), but this does not in itself mean that Calgary home prices will drop by 20%, or even drop at all.

Well, all the graphs are Calgary specific regarding what I believe is an overvaluation in real estate in terms of price to earnings ratios. Also, affordability indicators, and carrying costs point to a situation that is unsustainable.

The subprime mortgage issue applies (albeit to a lesser extent) to Calgary due to the fact that money is financed globally and there are now higher risk spreads between government of canada bonds and mortgage interest rates. In fact, risk spreads are at the highest since the 80's recession. And the relationship between higher interest rates, generally has the effect of reducing property values.

The Canadian mortgage-backed securities market has "vapourized." No one's trading in it anymore and there's only five key institutions left to support it.

I am very skeptical how the current house prices will be supported considering all these factors, I would imagine that there are significant risks to the downside, and little to no upside potential.

Well, all the graphs are Calgary specific regarding what I believe is an overvaluation in real estate in terms of price to earnings ratios. Also, affordability indicators, and carrying costs point to a situation that is unsustainable.

The subprime mortgage issue applies (albeit to a lesser extent) to Calgary due to the fact that money is financed globally and there are now higher risk spreads between government of canada bonds and mortgage interest rates. In fact, risk spreads are at the highest since the 80's recession. And the relationship between higher interest rates, generally has the effect of reducing property values.

The Canadian mortgage-backed securities market has "vapourized." No one's trading in it anymore and there's only five key institutions left to support it.

I am very skeptical how the current house prices will be supported considering all these factors, I would imagine that there are significant risks to the downside, and little to no upside potential.

While I think some of your graphs and arguments are interesting I've got to question your objectives.

Your mission, should you choose to accept it, is to make three posts on blogs other than this one. Preferably real estate related, to explain about what you understand to be an overvaluation in real estate. Use graphs, and persuasive arguments.

Why?

Posts like yours make you look just as bad as the bulls who can only see the good.

Another significant problem in Calgary is that the market can now provide 15,000 homes a year (and more if needed). When it could only provide 10,000 new homes and 20,000 people were moving here we had a problem. But when there are more new homes than new people on the new housing side, it makes resales tougher and tougher.

Also the way they calculate average price increases hides a drop in housing prices for at least a year. They take the price you pay at purchase but only count it at possession. So if you bought a house 15v months ago at the height of the boom, THAT is the price they are using TODAY in the average price. That is the ONLY reason prices went up this year - because they are actually last years prices.

On the counter side to all of that, times are far from tough enough in Calgary for people to take a loss on property - from builders not taking a loss on the price they paid per housing lot to individuals taking a loss on their new homes.

So i think you will see a drop in underlying fundamental prices of ~20% BUT that the actual realized prices will simply stay relatively flat for 10+ years until inflation catches up. Suburban condos on the edge of the city will take the biggest hit, with higher-end suburban homes right behind them. Downtown'ish homes will be the most insulated, along with the ring of 1980s'ish homes also holding prices relatively well. Downtown condos will hold well as well i think, but there are a lot of them under construction and far too manh in the same price range for the same demographic of buyers so even there i see some risk, especially if you paid $350k+ for a small 1bd-rm as sadly a lot of people did.

Suburban condos have already dropped in price more than 20% from their peaks and i see another 20% easily. They are easily replaced, poorly constructed and builders HAVE to build them in order to open up density allowence for their single family homes. They hold few actual lifestyle advantages and people still have to maintain the expense of a car or two v. downtown condos. And lastly, Calgary was one of the few markets out there were downtown properties were remotely in the same price level as suburban condos. People talk about downtown Toronto or Vancouver when talking about downtown Calgary prices, but few of them talk about the fact that prices drop off FAR more steeply from downtown to the far perifery in those markets than in Calgary.

But in short, the money has been made in this market for this entire generation. There will be tiny peaks and valleys but nothing like the past 5 years.

The best way to say it, as has ben said, is all downside risk, no upside potential. Regardless of what the actual pricing does....

Also the way they calculate average price increases hides a drop in housing prices for at least a year. They take the price you pay at purchase but only count it at possession. So if you bought a house 15v months ago at the height of the boom, THAT is the price they are using TODAY in the average price. That is the ONLY reason prices went up this year - because they are actually last years prices.

Claeren.

That only applies to NEW housing. When they calculate average home prices in Calgary they are calculating for new homes and resale homes.

^ Well, until fundamentals match the pricing you are looking at more downside risk than historically demanded of a buyer.

On the otherhand there is absolutely no rule that people cannot continue to make poor purchasing decisions, especially in terms of home buying where people need a home regardless of the investment aspects of the purchase. And prices are set not by risk but by the masses - the actual buyers and sellers.

Personally, while it is a crap shoot, i am waiting to buy. In MY opinion the market will NOT go up more than 10% and is more likely to drop or stay stagnant for years. So i figure in ~4% of inflation this year and it seems prudent to give up (10%max-4%inflation) 6% upside to see what happens and potentially see 0% growth or less in the next 2 years - which after inflation is a 5%-10% drop. I am hoping with all these downtown condos coming online next year i can find some desperate speculator willing to cut their price ot get out of their condo.

Once the 10,000 condo units under construction are finished you will see those prices tank as well.. I'm sure you'll find some dumb speculator who just lost their shirt, there'll be plenty of them to go around.. I see some posting the desperation sales ads on my work buy and sell already..

A down turn of 20%, no way, at least not this year. Yes we just had a very slow winter with prices going down a lot, but that was expected and will happen again next year. Now that January is here the market has picked up significantly, as Oxlong mentioned listings are close to 5,000 when there were 10,000+ at times near the end of 2007. Every one of my houses I have for sale, showings are picking up, and I just came across multiple offers on of of my listings, four to be exact. I predict an 8% gain with most coming in the first half of the year. Neat graphs Radley, and while I do agree that one of these years we'll see Calgary declining, just not this one.

Here's an email I received from Ron Stader - Real Estate Broker/Owner of CIR Realty, at the beginning of this year.

"Hi Everyone,

It appears our market is beginning to gain some momentum again. Many Buyers have been sitting on the sidelines, believing real estate prices would continue to go down. But this hasn’t really happened. In fact, lately the media have been quoting expert industry opinions forecasting prices will rise 7% to 9% in 2008.

As a result, some astute Buyers are re-thinking their “wait-and-see” strategy and are starting to take advantage of their current negotiating power and the large inventory of properties.

In my opinion, the coming spring market will be busy. There should be plenty of listings and plenty of Buyers, good news for you, CIR and our industry.

p.s. You may want to advise your Buyers it looks like this could be a good timefor them to get serious if they want to avoid paying more next year.

I don't see where everyone is getting the overvalued aspect. I don't think there is room for another boom thats for sure but i don't see a large decrease coming in our future. In previous years, Calgarys market was extremely undervalued when compared with other major cities across Canada. Now that Calgary has caught up, maybe slightly over valued we're not going to see big growth again anytime soon.

However, i think anyone expecting a 20% drop over the next year or 5, is quite honestly off their rocker. I'm expecting to see growth at roughly the rate of inflation for the next little while.

So as a potential first time home buyer, when will be a good time to buy? Now? 6 months? A year? more?

I think the last few months have been a fantastic time to buy. There have been lots of people in fairly desperate situations that have to seel their homes. You can get some fantastic deals from some really motivated buyers.

Some speculators might be in a jam, people who have built a house and need to get rid of their old place, situations like that were all over the place in the last few months. The market is starting to balance out but if you have a good realtor and look carefully there are some fantastic deals available out there right now.

I would reccomend buying as soon as possible if you are renting. Your throwing your rent away. Even if the market stays where it is at least you are paying into your own equity.

As a general rule Fall/winter are good times to buy as it is more of a buyers market. Less people buying means more time to look and sellers are genrally willing to negotiate on price. Spring/early summer are more of a sellers market as there are more buyers in the market increasing your competition.